Is health care the ‘single biggest factor’ driving down the budget deficit?

“Obama said the cost of “health care is now the single-biggest factor driving down” the federal budget deficit.

… We rate Obama’s claim Mostly True.”

—PolitiFact, from an Oct. 8, 2014 fact check of President Obama

Overview

The mainstream fact checker PolitiFact exemplifies inconsistency with its fact check of President Obama.

The Facts

On Oct. 8, 2014, PolitiFact published a fact check of a statement from President Barack Obama. Obama, speaking at Northwestern University on Oct. 2, 2014, talked about the economy and the effects of the health care reform bill he signed into law in 2010 (bold emphasis added):

Partly because health care prices have been growing at the slowest rate in nearly 50 years, the growth in what health care costs the government is down, also. I want everybody to listen carefully here, because when we were debating the Affordable Care Act there was a lot of complaining about how we couldn’t afford this. The independent, nonpartisan Congressional Budget Office recently reported that in 2020, Medicare and Medicaid will cost us $188 billion less than projected just four years ago. And here’s what that means in layman’s terms: Health care has long been the single biggest driver of America’s future deficits. It’s been the single biggest driver of our debt. Health care is now the single biggest factor driving down those deficits.

PolitiFact focused on the part we emphasized in bold, rating it “Mostly True”:

Obama said the cost of “health care is now the single-biggest factor driving down” the federal budget deficit.

The CBO recently lowered its projection for long-term deficits and specifically cited health care costs as the main reason, though the Affordable Care Act is not necessarily the primary cause of that calculation. That said, even though projections are lower than they were years ago, health care spending is rising in the short term and will keep adding to the deficit. We rate Obama’s claim Mostly True.

The following analysis will focus on the reasoning PolitiFact uses to justify its rating of the president.

Analyzing the Rhetoric

PolitiFact’s fact check rightly recognizes that the president is talking about future deficits. The president says health care is now driving down those (future) deficits. But the statement is problematic: The federal budget deficit continues to climb.

PolitiFact’s kindest cut

Notably, PolitiFact breezes past the ambiguity without comment to give Obama’s statement a charitable interpretation: Obama is talking about cutting the growth of future deficits, not about literally cutting the deficits. We find that PolitiFact’s work contains a number of inconsistencies.

Cotton’s ad claimed that “Pryor cut Medicare to pay for Obamacare.” In reality, the Affordable Care Act calls for a slowed growth of Medicare funding, not a slash to current funds. The savings from this approach will be used to offset Obamacare costs. Because the ad doesn’t make this clear, we rate Cotton’s claim Half True.

In Cotton’s case, the failure to clarify that the “cut” was a rein on future growth dropped the rating to “Half True.”

Obama’s term “driving down” carries about the same meaning as “cut.” But in Obama’s case PolitiFact offers no indication that his failure to clarify his meaning affects its “Truth-O-Meter” ruling.

Credit where credit is due?

About a year ago, we realized we were ducking the underlying point of blame or credit, which was the crucial message. So we began rating those types of claims as compound statements. We not only checked whether the numbers were accurate, we checked whether economists believed an office holder’s policies were much of a factor in the increase or decrease.

As with the issue of “cuts,” PolitiFact offers no clue in its fact check that it considers taking credit an issue with this fact check. Obama makes clear he’s taking sizable credit when his speech turns to the issue of health care reform (bold emphasis added):

Today, we have seen a dramatic slowdown in the rising cost of health care. When we passed the Affordable Care Act, the critics were saying, what are you doing about cost. Well, let me tell you what we’ve done about cost. If your family gets your health care through your employer, premiums are rising at a rate tied for the lowest on record. And what this means for the economy is staggering. If we hadn’t taken this on, and premiums had kept growing at the rate they did in the last decade, the average premium for family coverage today would be $1,800 higher than they are. Now, most people don’t notice it, but that’s $1,800 you don’t have to pay out of your pocket or see vanish from your paycheck. That’s like a $1,800 tax cut. That’s not for folks who signed up for Obamacare. That’s the consequences of some of the reforms that we’ve made.

Why doesn’t PolitiFact take credit or blame into account in this fact check?

Health care spending remains the single biggest driver of the budget deficit and, as a result, the single biggest contributor to the debt. The president’s words convey the opposite impression. PolitiFact’s fact check, especially its visual presentation, reinforces that false impression.

Note how the “Mostly True” graphic at upper right accompanies a literally false claim about the deficit. Image from PolitiFact.com.

PolitiFact’s summary paragraph adds to the confusion by stating “the Affordable Care Act is not necessarily the primary cause” of the CBO’s lowered projections for the growth of health care spending. Earlier in the fact check, PolitiFact paraphrased an expert from the left-leaning Brookings Institution saying it was unlikely, not merely uncertain, that the ACA was the primary cause (bold emphasis added):

Mark McClellan, a former head of Medicare and Medicaid under President George W. Bush, now at Brookings, said it’s unlikely the legislation itself is the main factor, since the slowdown in health care costs began before the law was enacted, and most of the cost contractions comes [sic] from areas of health care care [sic] that aren’t directly affected by the law.

PolitiFact offers no information contradicting McClellan’s assessment. If McClellan is right, then it’s doing Obama a favor to say the ACA is “not necessarily the primary cause” of lowered projections for the growth of costs. The phrasing encourages one to think the ACA may well be the primary cause.

Experts have not settled definitively on the cause, though professional assessments typically cite the weak economy as a primary reason.

Equivocation and ambiguity

PolitiFact’s fact check also appears to overlook the way the president put together his argument. After laying a rhetorical groundwork for the ACA’s role in lowering health care costs, Obama notes that health care—Medicare and Medicaid—serves as the single biggest driver of the budget deficit. PolitiFact found this “Mostly True” in the course of a 2009 fact check of Obama. Obama then gives the impression health care no longer drives the deficit. Thanks to the ACA, something’s changed. Obama says health care now drives the decrease in the deficit.

The alert reader sees that Obama shifted from talking about the growing deficit problem to a claim that the factor that was driving the rising deficit now serves to lower that same deficit. Let’s review his words:

Health care has long been the single biggest driver of America’s future deficits. It’s been the single biggest driver of our debt. Health care is now the single biggest factor driving down those deficits.

Obama names the problem, deficit growth caused by rising health care costs, and claims his policies gave the solution: His policies turned health care into the biggest factor driving down the deficit. The three sentences quoted above together encourage that contrast. But, as we noted at the outset, healthcare costs remain the biggest drivers of the deficit into the future. PolitiFact fails to give its readers any measure of the gravity of the situation. One of the sources PolitiFact cites, the CBO’s “The 2014 Long-Term Budget Outlook,” provides the grim numbers PolitiFact omits:

Federal spending for Social Security and the government’s major health care programs—Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies for health insurance purchased through the exchanges created under the Affordable Care Act—would rise sharply, to a total of 14 percent of GDP by 2039, twice the 7 percent average seen over the past 40 years. That boost in spending is expected to occur because of the aging of the population, growth in per capita spending on health care, and an expansion of federal health care programs.

The CBO says federal spending on health care will rise sharply and reach 14 percent of GDP by 2039. PolitiFact’s readers may be forgiven if they remain unaware that the ACA has not made much of a dent in the problem Obama hints he has solved.

As the chart above shows, the CBO projects health care spending will overtake all other federal spending other than Social Security and interest spending within 20 years. The problem remains unsolved.

The fix is in?

It’s worth spending some time describing the approach Democrats took to addressing health care spending through the ACA. The primary efforts to reduce health care spending were aimed at lowering Medicare costs. The bill adopted a number of methods, including changing reimbursement rules to encourage effective care and mandating a soft cap on Medicare spending loosely indexed to GDP. At the same time, the bill expanded Medicaid spending and started subsidizing insurance costs for many Americans buying their insurance through the ACA-established marketplace system.

In short, the law shrinks the growth of Medicare spending while accelerating the growth of health care spending in other areas like Medicaid and insurance subsidies.

How much have budget deficit growth projections dropped?

Regardless of whether the ACA had the greatest effect, how much have the CBO’s budget projections fallen since 2007? PolitiFact cited David Rosnick of the left-leaning Center on Budget and Policy Priorities. Rosnick, via PolitiFact’s papraphrase, said CBO projections for Medicare and Medicaid spending dropped from about 18.6 percent of GDP for 2082 down to about 13.1 percent.

PolitiFact gives no sign in the text of its story that it attempted to verify Rosnick’s claim. We found a table in the CBO’s 75-year budget outlook from 2007 and a graph in the 20014 version that offer support for Rosnick’s numbers.

2007 table (Congressional Budget Office)

2014 chart (Congressional Budget Office)

Rosnick identifies a substantial drop, but recall that the ACA wasn’t likely the main reason for the decrease. And it’s worth noting that the CBO emphasizes the uncertainty of its long-term budget predictions.

Summary

Mixed in with its ambiguity and misinformation, PolitiFact has a point that health care costs are now and for the future the primary drivers of the deficit. Unfortunately, it’s hard to see how PolitiFact could justify a “Mostly True” rating for a claim that, taken literally, directly contradicts that valid point.

Slower increases in health care spending may serve as the single biggest factor reining in future increases to federal health care spending by the CBO’s projections. But the decrease, say the experts, probably does not come mostly from changes wrought by the health care reform bill.

“Health care is now the single biggest factor driving downthose deficits.”

Health care, now and in the future, serves as the biggest driver of the federal budget deficit. Taken literally, Obama’s statement is false. PolitiFact interpreted Obama to mean that the slowing rise of health care costs to the government serve to drive down future projections of the still-rising budget deficit. Our rating above uses PolitiFact’s charitable interpretation, pointing out that Obama’s words mislead his audience under that interpretation. A fallacy of ambiguity, driven by the context of Obama’s speech, encourages his audience to think health care is no longer the biggest driver of the deficit thanks to Obama’s signature health care reform law.

“We rate Obama’s claim Mostly True.”

President Obama’s claim is literally false, and misleads even when given a charitable interpretation. PolitiFact’s rating encourages the belief that its rating system is subjective.

Obama at Evanston,Oct. 2, 2014 (still from WH video)

Afterword

Sometimes the context of a true statement suggests it was crafted for the purpose of misleading the audience. The statement from Obama strikes us as that type of statement. Obama delivered a prepared speech using a teleprompter. Professional speechwriters, if competent, will eliminate needless ambiguity. Assuming competent writers produced this speech, the misleading ambiguity was likely an intended feature.

Correction May 5, 2017: Replaced “false statement” with “true statement” in the Afterword.